A notable shift in the cryptocurrency market has been highlighted by Markus Thielen, CEO of 10x Research and a former portfolio manager. In a recent interview with Bloomberg, he expressed concerns regarding Bitcoin’s price trajectory amidst signs of market fatigue, particularly following an exceptionally challenging October characterized by unprecedented liquidation events.
Thielen pointed out that the substantial institutional buying that has driven Bitcoin’s growth since early 2024 might also exacerbate potential corrections if investors begin to pull back. He noted that Bitcoin’s performance appears to mirror underlying macroeconomic risks, casting a shadow over its current standing in the market. With institutional inflows, particularly from spot Bitcoin exchange-traded funds (ETFs), being a significant catalyst for the 2024 rally, Thielen warned that if investor activity continues to dwindle, this same cohort could amplify any downturns.
“At one point, the risk manager may step in and say, ‘you need to eliminate or lighten your position’,” Thielen explained. He highlighted that a rebalancing of portfolios among institutional investors might lead to further underperformance for Bitcoin, a scenario that many market watchers are starting to consider.
Data from CoinShares corroborates Thielen’s concerns, revealing that US spot Bitcoin ETFs have experienced significant outflows, with nearly $939 million withdrawn just last week. This trend suggests a decreasing appetite among institutional players for Bitcoin, raising questions about the cryptocurrency’s future performance.
The market dynamics have also shown that Bitcoin has not performed as strongly this year when compared to other major asset classes, which is particularly striking in the year following its most recent halving. Since January, Bitcoin has lagged behind traditional safe havens like gold, as well as various equity indexes, despite achieving record highs, including a peak above $126,000 in early October.
However, Thielen affirmed that 10x Research is not entirely bearish on Bitcoin. The firm views shorting Ether (ETH) as a more prudent hedge compared to betting against Bitcoin, which remains popular among institutional investors looking to gain exposure to the cryptocurrency space.
Additionally, market analysis indicates that much of Bitcoin’s recent struggles can be traced back to large holders, referred to as “whales,” who have been taking profits as prices surged past the $100,000 threshold. Citigroup’s Alex Saunders echoed this sentiment, noting a gradual decline in the number of wallets containing more than 1,000 BTC in recent weeks, further illustrating the changing landscape for Bitcoin investors.
